Frank Kerins presents: Empirical examination of the impact of the Sarbanes-Oxley Act on banks

This research project is an empirical examination of the impact of the Sarbanes-Oxley Act (SOX) on the performance of banking institutions. To the extent that there are compliance costs associated with SOX, such as increased auditing and accounting expenditures, one argument is that SOX places an unnecessary burden on adopting banks, thereby negatively impacting their performance. Conversely, others may argue that SOX improves financial statement comparability and reduces earnings management. We propose testing the effects of SOX on three groups of banks: (1) publicly-traded banks that must comply with SOX, (2) privately-held banks that at least partially adopt SOX practices voluntarily, and (3) privately-held banks that do not adopt SOX. In doing so we test the pre- and post-SOX effects on the short- and long-term performance of various size banks, which have varying levels of commitment to SOX regulation. 

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